The Implications of Violation of Business Ethics - Essay Example

Business Ethics and Sustainability – BP’s oil spill in the Gulf of Mexico Introduction The ability of businesses to expand rapidly in their industry is often set as a key criterion for assessing their success and their potential to secure growth in the long term. However, when referring to businesses, competing effectively has been related to a vital implication: ethical rules can be violated, at lower or higher level, a problem which can take quite long to become clear to relevant authorities. In addition, business ethics, if violated, can have severe effects on the natural environment. The implications of violation of business ethics, as also related to sustainability, are reviewed in this paper. Reference is made to a specific case, as an example: the oil spill caused by BP in Mexico in 2010. Different ethical approaches are used for evaluating the role of parties in the specific ethical issue and for understanding how the effects of this issue, in terms of ethics, could be limited. Also, the following problem is explored: can a particular ethical theory be used for realising all aspects of an ethical issue in the business sector or a combination of different ethical approaches would be rather preferred? The examination and the analysis of the facts of the specific case, as based on appropriate literature, lead to the following assumption: business decisions and operations can be quite complex; current ethical approaches are not able, if used separately, to explain all ethical issue related to business activities no matter the size of a business. 2. Business ethics and sustainability in practice – BP’s oil spill in Mexico 2.1 Presentation of facts In the 20th of April 2010 a strong explosion occurred in BP’s ‘drilling rig in the Gulf of Mexico’ (The Guardian, 2010). The site’s safety measures were proved quite problematic: a mechanism that had been established for controlling the leak of oil did not operate while no plan appeared for limiting the human losses in regard to the company’s staff in the particular site (The Guardian, 2010). As a result, about 11 employees died while 17 others suffered severe injuries; also, an extended oil slick was gradually developed affecting the natural environment, see waters and coasts, in the greater Gulf area (The Guardian, 2010). About ‘200 million gallons of oil’ (Geggel, 2015) have been released in the Gulf of Mexico during the 87 days that followed the explosion in BP’s particular drilling rig (Neuhauser, 2014). The damage caused on the area’s natural environment has been quite critical (Figure 1). Figure 1 – Expansion of oil after the explosion of BP’s drilling rig (BBC News, 2012) Due to its effects on the environment, the specific incident was carefully investigated by the authorities, as of all its aspects. At a first level, failures were identified in regard to the testing of the rig’s technical standards but also as of employees’ potentials to respond to emergencies in the workplace (BBC News, 2012). Also, it was made clear that the firm’s managing staff had no plan for controlling the effects of such event: oil continued to leak, for several days, from different points near the rig’s key drilling area (Bora, 2014). It should be noted that the studies developed for checking the recovery of the region’s natural environment, as a result of the particular incident, led to a disappointing finding: about ‘30 million gallons of oil’ (Geggel, 2015) among those released in total after the specific incident have been ‘settled at the bottom of the sea’ (Geggel, 2015). This means that the natural environment in the Gulf of Mexico can suffer further damages due to the above incident and that these damages could last for quite a long time, especially if taking into consideration the region’s structure and biodiversity, as indicated in the photo in Figure 1. Two years after the incident, the US courts held that two of the firm’s supervising managers have failed in responding to their duty as of their position: these managers were responsible for the safety tests developed in regard to the specific drilling rig; even if they had identified safety issues as of the above rig they have not notified the rig’s engineers accordingly (Jervis and Johnson, 2012). As a result, the particular managers were found by the courts as being responsible for manslaughter in regard to the firm’s employees who died during the specific incident (Jervis and Johnson, 2012). In addition, a third executive of BP was found as having provided false information to the US Congress in relation to the amount of oil released from BP’s specific rig (Jervis and Johnson, 2012). In 2014 the courts reviewed the firm’s responsibilities as of the incident in the Gulf of Mexico: BP was found ‘guilty for gross negligence and willful misconduct’ (Neuhauser, 2014). 2.2 Use of ethical theories to explain the specific ethical issue The incident in the Gulf of Mexico, as described above, could be analysed using different approaches related to ethics, as these approaches are also applicable to events occurring in the business environment. Each of these approaches lead to different assumptions as of the role of the parties in the specific incident but also of the potential solutions available for confronting the ethical issues appeared during the specific incident. 2.2.1 Utilitarian approach Utilitarianism, a theoretical framework based on the work of Bentham, promotes the idea that the moral characteristics of an action should be evaluated based on the action’s actual outcomes and not on the action’s causes/ intentions of the actors (Renouard, 2010). According to the particular approach an action could be considered as moral if it could secure the ‘happiness of as many people as possible’ (Renouard, 2010: 86). The specific approach, if used in the context of business activities, sets an important rule for managers: in regard to their job duties/ tasks these individuals should act after carefully considering the effects of their actions for the public (Chudzicka-Czupala, 2013). The term public, as used in the utilitarian approach, includes all people who are affected by the activities of a business, meaning employees, customers, stakeholders and the community (Velentzas and Broni, 2010). The use of the utilitarian approach for analysing the case under examination would have three steps/ phases: a) in the context of the first phase, the options available to the firm’s employees/ managers would be identified. According to the material reviewed in regard to the specific incident the time available to the firm’s staff for reacting was quite limited. However, the leaking of oil had started before the explosion; if someone from the staff would be able to identify the incident, then an emergency signal would have been set on. Then, human losses could have been avoided; still, the effects of the incident on the community would have not been avoided given the fact that the mechanism for tapping the leaking point was proved faulty. After the explosion, the firm’s employees in the site had no potential to control the leaking of the oil. It is derived that only the firm’s managers were able to limit the effects of the particular incident. Indeed, these individuals should have notify early the local authorities, including the Congress, so that appropriate measures are taken immediately for stopping the expansion of the oil spill. As revealed through the material presented above, the firm’s executives have failed in providing accurate information to the authorities; communities in the regions surrounding the drilling area were notified with delay and the effects on the local ecosystem have been major. A second action available to the firm’s managers would be the following: the help of competitors for tapping the leaking point should have been requested. As already noted, the leaking of oil has been continued in the Gulf of Mexico for about 87 days. BP had face important difficulties in sealing the points from which oil was released to the sea. The help of other firms would be necessary no matter the financial implications of such decision for BP. If such strategic alliance had been developed then the leaking of oil would have stopped quite early; in such case, the damages caused on the natural environment of the Gulf of Mexico would be quite limited. The actions available to BP’s managers in the context of the Utilitarian approach are presented in the table in Figure 2. Actions available Parties affected Benefits/ harms Actions resulted to major benefits Provide appropriate information to local authorities BP Failures of the firm (safety issues etc. ) would be made revealed Employees Losses and injuries would have been avoided/ limited People in surrounding communities Effects (health issues, economic issues etc.) on the daily life of local people would have been limited The state Less costs for facing the incident/ Economic effects related to the destroy of local fisheries would have been avoided Ask for the help of competitors The same as in the first action An important benefit, in addition to the above ones: The time required for tapping the leaking point could have been significantly limited. An additional harm for BP: increased costs for covering the relevant expenses/ loss of profits locally depending on the arrangement made with the competitors The second action should be preferred as more appropriate, among the two available ones, for securing morality Figure 2 – Actions available to BP’s managers and benefits involved using the utilitarian approach 2.2.2 The Rights Approach In the context of the Rights approach the morality of an action is evaluated after checking the level at which the action is opposed to the rights of the people affected by the particular action (Norman, 2014). These rights may not be necessarily incorporated in the legal framework of the local state but they can be also rights recognised by ethical laws (Visser, 2010). Also, certain rights may not be linked directly to specific groups of people but they can refer to the public in general, such as the right to sustainability which can be related to the right to a healthy living environment (Chen, 2012). The incident in the Gulf of Mexico can be reviewed using the specific approach; such review would result to a series of critical assumptions, as presented in the table in Figure 3. Actions occurred during the incident Rights violated Failure of BP’s managers to notify local staff in regard to safety problems of the drilling rig The right of employees to personal safety/ health Failure of BP’s managers to provide accurate information to local authorities The right of the state to be given accurate information by individuals The right of the state to ask for the respect of the agreements developed with third parties Failure of BP’s managers to act rapidly for controlling the problem The right of individuals/ public to personal safety/ health Figure 3 – Evaluation of the morality of BP’s incident using the Rights Approach 2.2.3 The Fairness or Justice Approach The Justice approach has been based on the views of Aristotle in regard to the treatment of situations/ individuals, as related to daily human activities. According to the particular approach an action would be characterised as moral if it is characterised by the following practice: fair treatment is provided to all parties, taking into consideration their role/ participation in the development of the particular action (Crane and Matten, 2010). An important challenge related to the specific approach is the following: it can be often difficult to judge whether a party has been treated fairly especially if its role in the action under examination has not been clear (Driver, 2013). Also, critics can appear in regard to the criteria used each time for deciding the fairness of an action; indeed, the treatment provided to a party may be considered as fair at a particular point of time but unfair if it is evaluated under different conditions (Driver, 2013). The fairness of the actions of BP’s managers in regard to the incident under examination can be evaluated by referring to the various parties affected, directly or indirectly, by the particular incident. The findings of such evaluation are presented in the table in Figure 4. According to the particular table there has been no party that had been treated with particular attention by the managers of BP. In fact, the firm’s managers treated all parties involved in the incident, as presented in Figure 4, with high disrespect. The nature and the extension of the incident cannot be used for justifying the behaviour of BP’s managers both during the incident and in the period that followed. In this context, the specific incident is not characterised by unfairness as of the treatment provided to the parties involved. Parties Treatment provided by BP’s managers to third parties Employees Employees were not notified on critical safety issues of the site Employees were not given appropriate support for facing the effects of the incident (compensation, consultancy services etc.) The state Not accurate information was provided to the state in regard to the size/ nature of the damage The public/ people living in the surrounding areas No measure was taken for developing strategic alliances, a fact that would allow the firm to tap the leaking point quite early; in such case, the damage in the greater region would be significantly reduced Figure 4 – Treatment provided by BP’s managers to the parties affected by the incident in BP’s drilling rig in the Gulf of Mexico 2.2.4 The Common Good Approach Common good, as a concept, shows ‘what society needs in order to live in a good way’ (Argandona, 2011: 2). In the business environment, the specific concept can be used for showing different aspects of a business. For example, when referring to the role of managers, the term common good is used for highlighting a critical responsibility of each manager: to ‘coordinate the interests of stakeholders for achieving the good which is common to all’ (Argandona, 2012: 3). If used as part of the ethics theory, the common good approach is expanded covering the interests of the public in general (Nattrass, 2013). The promotion of sustainability, as related to the quality of life of all people, would be an important means for securing public good (Nattrass, 2013). In the specific case, BP could ensure that common good is ensured by incorporating effective safety measures in regard to its site in the Gulf of Mexico. Such practice could be considered for BP as fully aligned with morals and ethics. However, the events of the specific incident lead to a different assumption: in the specific case common good was not addressed (Figure 5), a fact that denotes the opposition of BP’s behaviour to ethics. Activities of BP’s managers in regard to the incident in the firm’s site in the Gulf of Mexico Has common good be addressed? Not appropriate attention was given to the results of the safety tests of the drilling rig in the Gulf of Mexico No The safety equipment used in the specific site did not meet the necessary quality standards No Critical information was hidden by authorities/ false information was provided No No help was asked by competitors so that the leaking point is tapped early No Figure 5 – Effects of the activities of BP’s managers on common good 2.2.5 The Virtue Approach Another important approach for evaluating the morality of an action is the Virtue approach. The specific approach promotes the view that certain values should be strongly supported by people. These are the values the violation of which would severely affect personality and which should be a key component of behaviour of most people. However, these values may be set in different hierarchical order by each individual. For example, truth could be considered as the most important for an individual while for another individual courage would be considered as having the highest value (Lomborg, 2001). In the context of the business the promotion of values is not feasible unless ‘an ethical code is implemented’ (Belak and Rozman, 2012: 1610). This means that virtue cannot be enhanced in a business environment without appropriate adjustments to the culture and the objectives of the business. If using the virtue approach for evaluating the behaviour of BP’s managers during the incident under examination the following assumption can be developed: the failure of these managers to promote specific values, as described indicatively in Figure 6, has been a result of their firm’s failure to support ethical behaviour. This firm even if having introduced a CSR framework it has been unable to realise it in practice, as revealed through the incident in the firm’s site in the Gulf of Mexico. Activities of BP’s managers when managing the incident in the firm’s site in the Gulf of Mexico Virtue violated Results of the safety tests in regard to the firm’s drilling rig in the specific area were ignored Ethos (as a moral rule) No particular provision was taken for protecting the safety/ lives of employees Responsibility Information provided to authorities was either inaccurate or false Trustworthiness Strategic alliances/ support from competitors for tapping the leaking point were avoided Integrity Figure 6 – Activities of BP’s managers, as opposed to different aspects of Virtue 3. Conclusion The explosion of BP’s drilling rig in the Gulf of Mexico in 2010 had a series of critical effects on the region’s natural environment. The life of millions of people living in surrounding areas has been also affected. In fact, the power of the incident to affect the environment and the social/ economic life of the greater region has been found to be significant. The violation of ethics seems to be a critical reason for this phenomenon. Indeed, the evaluation of the incident using five different ethical approaches has led to a series of interesting findings. Primarily, the firm has not supported ethics, at least not adequately, as part of its culture. At the next level, the monitoring over the activities of the firm’s managers has been problematic. As a result, the violation by these individuals of ethics has not been made clear to third parties; the incident in the firm’s site in the Gulf of Mexico has revealed a problem that could not be diagnosed in advance, meaning especially the opposition of manager’s behaviour to critical ethical values, such as common good (Figure 5), virtue (Figure 6) and rights in general (Figure 3). It could be argued that in a business environment managers are commonly asked to emphasise on the interests of shareholders at the level that these individuals hold most risks in regard to business activity (Porritt, 2007). However, when referring to businesses the activities of which can highly affect the environment and the society, as in the case of BP, then such view could not be accepted. These firms also have to address the interests of their shareholders but not at a level higher than ethical values, such as common good and virtue. In addition, the incident in the Gulf of Mexico has been found to be opposed to all ethical values related to business ethics, a fact that denotes the necessity for the firm to review its culture and to introduce different priorities as of its operations. Bibliography Argandona, A. (2012) ‘The Common Good, Stakeholder Theory and The Theory Of The Firm’ 1st International Workshop, ESSEC BUSINESS SCHOOL / March 8-9, 2012 / Cergy (Paris), FRANCE, 1-27. 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